Employer Matching

[pmacduff]

I've been asked by a client if I could tell them an "average" matching contribution formula or perhaps what the most common match formula might be that we see in Qualified Plans.

I've been in pensions for 17 years and in the old days it was very common (in our area anyway) to see a 50% match up to 6% deferred.

But...that WAS in the old days. There are so many different possiblities now, along with the safe harbor match plans, that I can't even begin to imagine a general average match formula.

Also, many of our small clients have suspended or eliminate their match formulas for economic reasons.

This particular client uses a 50% up to 4% match and was told by an employee on their benefits panel that the match was low.

Any thoughts?

[Kimberly S]

If I were looking at this from the perspective of an employee I would think they should match every dollar I defer. Many articles about financial issues imply or specifically state that most employers match every dollar.

As a practitioner, I've seen match formulas from none to 150% of deferrals.

The truly relevant information is what similar employers in that geographic area are doing.

[austin3515]

For what it's worth, the match formula you see more than any other is still 50% up to 6%. I see a LOT of others doing 25% of 4%. No one formula has the majority, obviously.

[Sully]

This might be helpful:

http://www.psca.org/PRESS/P2007/Sept24.html

[A Shot in the Dark]

Sully:

Nice Attachment.

[pmacduff]

Sully - yes, I tried to thank you earlier but was unable to post. The attachment is great.

[austin3515]

I agree it was nice!

BUT if your in the market I'm in (10-100 part. as "sweet spot") a little quick math tells me that average plan in the survey has 6,000 participants!!

I almost fell out of my chair when they said the average profit sharing was over 9% of pay!! That just doesn't happen (often) in the small plan world!